Cutting Department and Assembly Department are two departments in Ideal AA

Garment that are considering operating a machine together. The operating cost of each

1

department to operate the machine on its own is RM36,000 for Cutting Department and RM24,000 for Assembly Department. If they operate the machine together, the operating cost will decrease to RM48,000. a. Calculate Cutting Department and Assembly Department respective share of

operating cost under the stand-alone cost-allocation.

b. Calculate Cutting Department and Assembly Department using the incremental cost-

allocation method. Assume Cutting Department to be the primary party.

c. Calculate Cutting Department and Assembly Department using the incremental cost-

allocation method. Assume Assembly Department to be the primary party.